U.S.-China: Food to Trade and Tech Control

Said El Mansour Cherkaoui  October 31, 2023

Introduction:

U.S. Exporting to China Potatoes Chips and Controlling Semiconductor Chips

Building the Belt and Road Initiative, or BRI

Importance of Exports for the U.S. Agricultural Products

With U.S. agricultural output growing faster than domestic demand for many products, U.S. farmers and agricultural firms have been relying on export markets to sustain prices and revenues. As a result, U.S. agricultural exports have grown steadily over the past 25 years—reaching $196 billion in 2022, up from $62.8 billion in 1997.

The share of U.S. agricultural and food production sold outside the country indicates the level of these sectors’ dependence on foreign markets, as well as the size of the overall market for U.S. agricultural products. Since 2011, the share of U.S. agricultural and food production (in terms of value) sold in international markets has remained steady at approximately 20 percent. Among the many products that make up U.S. agricultural trade, the USDA Economic Research Service (ERS) estimates that on average 23 percent of the output of nonmanufactured agricultural products and 22 percent of manufactured agricultural products were exported between 2011 and 2021 (figure 5).

China compensates for its agricultural production deficit by massively importing agricultural and agri-food products.  In 2022, China imported $236 billion worth of agricultural products, of which 15.4% came from the United States.

Destinations for U.S. agricultural exports have also shifted over the last 25 years. The elimination of agricultural trade barriers, as a result of the North American Free Trade Agreement (NAFTA)—superseded by the United States-Mexico-Canada Agreement (USMCA) in July 2020—nearly quadrupled exports (by value) to Canada and Mexico (for more information on U.S. trade with Canada and Mexico, see USMCA). Coinciding with policy developments, rising household incomes and changing trade policies in developing East and Southeast Asia have driven export growth—especially for China, whose share of U.S. agricultural exports more than quadrupled, from 4 percent during 1997–2003 to 15 percent during 2011–22. Meanwhile, there has been a decline in the export share going to Europe and high-income East Asia, particularly Japan (for data on U.S. agricultural destinations (figures 3 and 4), see Foreign Agricultural Trade of the United States).

China Becoming Select – Selective with New Food-Related Laws and Standards

China can select which products, which enterprises, and which investments and even refuse and reject food products to maintain its Food Policy of Sovereignty and Food Safety which at the same time provides a double shield and double edge sword making foreign companies propose MOU favorable to the criteria set by China for its own steps of economic progress and innovation while protecting its industries, its population and its consumers. Over the past two decades, China has imposed numerous new food-related laws and standards, mostly to address its own problems with food safety and fraud. Imported food also must meet these requirements, some of which are unique to China.

U.S. Products Accounted for 7 Percent of Refusals

China Imports Protective Configuration

In some cases, rejection could be seen as “administrative barriers” to the free circulation of goods and entrance into the Chinese Market as well as an attempt to protect local production from outside competition.

Honey stands out as the only item with a refusal rate above 1 percent. China cited high bacteria counts, the addition of sugar, unspecified adulterants, and antibiotic residues in rejections of honey from countries such as New Zealand, the European Union (EU), Australia, and Thailand. However, China exports more honey than it imports, and international news media commonly identify China as a source of adulterated honey exported to the United States and Europe.

Consumer-ready items such as baked goods, pastries, snack foods, health supplements, drink mixes, candy, bottled water, wine, and other beverages not only have the highest refusal rates but also comprise the largest number of refused shipments. Processed foods and beverages together accounted for 77 percent of refused shipments during 2013-19 while accounting for only 19 percent of the value of China’s food imports.

Read more on this at China’s Safety Requirements Pose Challenge for Food Exporters

U.S. Exporting to China Potatoes Chips and Controlling Semiconductor Chips

It seems that food does not obey the geopolitical interference and rivalries taking place between the United States and China that have emerged around the technological and telecom sectors with Huawei as the culprit during the Trump Presidential Era. As U.S.-China relations worsened under the administration of former President Donald Trump, Chinese researchers in the U.S. began to come under greater scrutiny.

In 2020, Trump ordered a ban on graduate students from China with ties to the military. Since then, tensions with China continued to grow over everything from global flashpoints to trade to technology. President Joe Biden has also shown concern over China’s acquisitions of U.S. technology, imposing restrictions on the transfer of some sensitive items such as AI capabilities.

---

The Administration of President Biden sacralized this trend by expanding to many areas of relationships and exchanges between the US and China to prohibit the presence of Chinese Nationals in high-level scientific, industrial, and research sectors. Underlining the importance of the issue, Biden issued an executive order on October 30, 2023, with the intention “to ensure that America leads the way,” as well as establishing greater safety and security standards. The confirming decision of such evolution was the ban imposed by President Biden on China from accessing semiconductors in the US relayed by a massive investment to increase the independency and the strength of the national production of semiconductor products.

---

First Participation of the USDA in the Agricultural Expo in Shanghai

USDA leads a large agricultural delegation to the sixth China International Import Expo in Shanghai, a sign of growing cooperation between China and the United States. This will be the first time that USDA, an American federal agency, will participate in the CIIE. The CIIE is a mega trade exhibition organized by China to boost imports.

The sixth CIIE is scheduled to take place from November 5 to 10, 2023, and will be held at the National Exhibition and Convention Center (Shanghai), the main venue of the sixth China International Import Expo (CIIE), in Shanghai. Exhibitors will be 394,000 professional visitors registered to attend, returning to pre-pandemic levels, according to organizers. The five agricultural fairs previously organized by the CIIE had recorded the signing of trade agreements totaling 350 billion dollars. Such an amount could not be ignored by the USDA.

According to the USA Poultry & Egg Export Council (USAPEEC), the USDA Foreign Agricultural Service and AmCham Shanghai invited American agricultural cooperatives to exhibit at the Sixth CIIE 2023 in the American Pavilion, thereby promoting the image of the sector of American poultry and the USAPEEC brand image.

The US Department of Agriculture (USDA) will lead a delegation of US agricultural companies to attend the CIIE, according to a representative from the US state of Idaho.

The USDA will lead a delegation consisting of 15 U.S. agricultural companies and representatives from two U.S. states [Idaho and Georgia], Tara Qu, Idaho’s chief representative to China, told the Global Times on Monday. Idaho, with rich agricultural resources, is one of two states at the expo. The other state is Georgia. Tara Qu said Idaho has always valued the CIIE’s role as a large import location and the opportunities it brings. The US state has participated in the CIIE for four consecutive years, Qu said. The presence of the USDA on site will undoubtedly send a positive signal for Sino-US agricultural cooperation. Senior USDA officials are expected to attend signing ceremonies for any agreements, Qu said.

Other US food and agriculture companies, including Hormel, Morton Salt, and Orange Cheese Co, will debut their products at the CIIE. Likewise, the Almond Board of California is also participating in the CIIE for the first time.

He Weiwen, senior researcher at the Center for China and Globalization, told the Global Times on Monday (October 30, 2023) that while U.S. companies had already participated in the CIIE, the participation of a U.S. federal government agency brought the relationship of cooperation between the United States and China on a new scale and a higher level.

According to He Weiwen, this USDA initiative is in line with the stabilization and improvement of relations between the two countries and the recent context of bilateral cooperation becoming more substantial. “The concrete actions demonstrated by the USDA’s decision to oversee and promote American agricultural companies at the CIIE will produce positive effects and which will strengthen the win-win principle between the two countries.”

“Taking into account recent developments, we can say that Sino-American relations have the possibility of moving towards a better trend at several levels, such as the cooperation observed at the level of the American federal government, at the state level, at the company level, as well as within think tanks and exchanges between people,” he said.

News of the USDA’s decision came amid a flurry of diplomatic exchanges and visits by senior officials from both countries. 

Last week, China-US companies signed 11 agricultural purchase contracts for corn, sorghum, and wheat at the China-US Sustainable Agricultural Trade Forum and contract signing ceremony held in the United States.

At the event, Chinese Ambassador to the United States Xie Feng said China-US agricultural cooperation is complementary and win-win and has vast growth potential.

China is the world’s largest importer of agricultural products, while the United States is the world’s largest exporter of agricultural products. Bilateral trade in this area exceeded $50 billion in 2022.

China is the world and Asia’s most populous country, and the world’s second-largest economy. China is the world’s number one soy consumer, and the number one importer of U.S. Soy, which enables its world-leading aquaculture, animal nutrition, egg, edible oil, pork, soy- and plant-based food sectors. Soybeans continue to be the United States’ number one food and agricultural export to China U.S. Soy has collaborated with China since 1982.

Ambassador Xie Feng, Embassy of the People’s Republic of China in the U.S.A. shared, “People are the foundation of a nation, and food is of paramount importance. The China-U.S. agricultural cooperation is a rich land with bright prospects. China is the world’s largest importer of U.S. agriculture exports. The contracts signed today are multiple billions in value. Let us sow more seeds of cooperation on the fields of hope.”

Acting Deputy Under Secretary, USDA Trade and Foreign Agricultural Affairs Jason Hafemeister said, “These contracts illustrate the gains from trade: food is moving from surplus regions to the deficit; the confidence behind these contracts allows U.S. producers to invest where we have agriculture advantages; and this relationship will help foster the innovation needed to sustainably intensify production to deliver nutrition and food security sustainably.”

Jim Sutter, CEO of the U.S. Soybean Export Council (USSEC) and Chair of the U.S. Agricultural Export Development Council (USAEDC) said, “The collaboration between China and U.S. Soy continues to deliver food and nutrition security, and economic growth for consumers, companies and producers in China and the U.S. Sustainable agriculture production and trade are impact multipliers. China has been masterful at leveraging trade to achieve local food security and economic growth. We strive to maintain this stable and mutually beneficial collaboration cooperation between China and the U.S. Soy as the ballast for successful bilateral economic and trade relations.”

Cao Derong, President of CFNA said, “I believe that China-US economic cooperation will be further strengthened and produce more achievements with our joint efforts in the future.”

On Sunday, China’s Ambassador Xie and the Chinese industry delegation visited the Kimberley farm in Maxwell, Iowa, U.S.A. witnessed U.S. Soy’s sustainable and precision agriculture practices first-hand. In 2012, the Kimberly family hosted then-Vice President Xi Jinping. 

The Sustainable Agriculture Trade Forum was also attended by Ambassador Terry Branstad, President of the World Food Prize Foundation; Ambassador Kenneth Quinn, President Emeritus, of the World Food Prize Foundation; Governor Bob Holden, Chairman & President, of U.S. Heartland China Association; Stan Born, Chairman of USSEC; Dawn Scheier, Board Secretary of USSEC; Xiaoping Zhang, Regional Director of USSEC Greater China; April Hemmes, United Soybean Board Director; Kirk Leeds, CEO, Iowa Soybean Association; Grant Kimberley, Senior Director of Market Development, Iowa Soybean Association; Chen Ying, Director of Cereals & Oils Dept., CFNA; Cary B. Sifferath, VP, U.S. Grains Council; Dr. Chad Hart, Ag. Economist from Iowa State University, and several other dignitaries from both countries.

To contact TRI KC – TRI CONSULTING KYOTO

---

SOURCE  /  ECONOMY: Compilation of various sources listed in the text including the Global Times and U.S. Governmental Agencies, with reformulation and editing of the text and presentation by Said El Mansour Cherkaoui

---

ENGLISH VERSION – RELATED ARTICLES

---

---